The meme coin PENGU showed the biggest surge in the cryptocurrency market today, rising by approximately 10% in the past 24 hours. This rally occurred amid an overall cryptocurrency market downturn where major assets were unable to gain momentum.
However, despite the upward momentum, technical indicators suggest potential buyer fatigue, increasing the short-term correction risk for PENGU's price.
PENGU Faces Resistance and Downward Betting
From May 14 to June 26, PENGU traded within a descending parallel channel without gaining upward momentum. The breakout continued, and the current altcoin price rally is heading towards the May 14 high.
However, technical and on-chain analysis suggests buying pressure may weaken, and PENGU risks a short-term retreat. For example, the token's Relative Strength Index (RSI) is 72.16 at the time of reporting, indicating PENGU is in an overbought state and potentially facing a reversal.
The RSI indicator measures an asset's overbought and oversold market conditions. It ranges from 0 to 100. Values above 70 indicate an asset is overbought and a price decline is expected, while values below 30 suggest an asset is oversold and may see a rebound.
PENGU's RSI at 72.16 shows the altcoin is in the overbought area. This suggests buying pressure may not be sustainable in the short term, increasing the likelihood of a retreat or price correction as momentum cools.
Moreover, the aggregated funding rate across derivative markets has been significantly negative in recent days. This indicates growing bearish sentiment among leveraged traders. At the time of reporting, PENGU's funding rate is -0.0005%.
The funding rate is a fee periodically exchanged between long and short traders in perpetual futures markets to align prices with the spot market.
PENGU's consistently negative funding rate indicates short positions are dominant, suggesting traders are preparing for a potential retreat.
Combined with accumulating buyer fatigue, this suggests a possible price correction for PENGU in the coming days.
PENGU Attempts Breakout... Increasing Correction Risk
At the time of reporting, PENGU is trading at $0.0160, just below the $0.0170 resistance line. If profit-taking begins, this meme coin could face downward pressure to $0.0137.
If this support line does not hold, PENGU's price could further decline to $0.0128.
PENGU Price Analysis. Source: TradingView
Conversely, if demand strengthens, PENGU could break through the $0.0170 resistance line. A successful breakout could open the door to $0.0175, the last seen before the downtrend started on May 14.
